Feds looking to support innovation, job growth

As much as the 38 Studios LLC collapse seems to have dimmed the state’s appetite for investing in startups or other early stage companies, it has not put a halt to all public investments, at least not when the funding for the investments comes from the federal government.
Last week the R.I. Department of Labor and Training announced a $2.78 million award from the U.S. Department of Labor that will be disbursed through the Workforce Innovation Fund.
The money has been set aside to fund innovative research and development, according to the U.S. Small Business Administration’s Small Business Innovation Research program. The fund invests in programs that enhance workforce investment strategies and expand existing programs with a proven record of success.
“My hope today is to shape the path forward for a statewide initiative,” said Rep. James R. Langevin, D-R.I. “Our state is rightly focused on righting our economy, and I believe [knowledge-economy companies] can be a great addition both to the state and the region.”
Cheryl Zimmerman, CEO of FarSounder Inc., spoke at the announcement about her successful experiences with the program. In 2005 the company received a Phase I SBIR award for $100,000 from the U.S. Department of Homeland Security to develop a new type of sonar. The next year FarSounder received $823,000 for Phase II work.
The company is preparing a new 3-D sonar, and has used the program to help with its navigation system, and later, its underwater diver and threat protection.
“It takes a lot of time, effort and perseverance. We were rejected from several SBIR proposals before we became successful with grants from Homeland Security and then the Navy,” she said. “Without the SBIR and other government agencies, we wouldn’t have been able to expedite our technology to get into the commercial realm and to actually commercialize it. It enabled us to be global leaders in advanced navigation for surface ships.”
According to Zimmerman, small investments help smaller companies because they can innovate in a quicker fashion, overhead is smaller and completed ideas can get to market much quicker. She intends to continue using the program.
FarSounder is not alone in Rhode Island in landing funding. During the last four years, Ocean State companies have received more than 50 SBIR awards worth approximately $20 million from a number of federal sources. Currently, there are 11 federal agencies, including the Department of Energy and the National Science Foundation, that have SBIR programs. The Labor Department has announced the availability of about $20 million more through a second round of Workforce Innovation Fund funding, expected to be released in the spring of 2013, to begin its Pay for Success program. This model represents a new way of financing workforce-investment projects, through which the government delivers funding as an add-on to private capital and only if the enterprise applying for the funds delivers measurable results. Thus the risk of investment will shift from the public to the private sector.
The Commerce Department has its own program coming in the fall, worth $26 million and distributed through multiple agencies. The competitive grants are designed to support advanced manufacturing and innovation that lead to job creation. And like the Labor Department program, this challenge depends on public-private partnerships. Applications close July 9.
Finally, the Department of Defense has commenced its Rapid Innovation Fund, a competitive-bid program with the goal of accelerating new designs in the defense industry. A total of four solicitations will be made by the department, one for each branch of the military. Proposals will be due by mid-January, with awards announced at this time next year.
One of the goals of all the federal programs supporing innovation is to generate as many applications as possible.
“Outreach is a big part of it,” said Norman T. Deragon, public-information officer for SBA’s Rhode Island office, in talking about the SBIR initiative.
Since its inception in 1982, the SBIR program has awarded nearly $147 million in Workforce Innovation Fund grants out of an original allocation of $98 million that was augmented by $49 million in fiscal years 2011 and 2012.
Sean Greene, the SBA associate administrator for investment and special adviser for innovation, notes that the program is highly successful. “Studies have shown that [more than] 50 percent of SBIR awardees get products to market, a phenomenally high success rate,” he said. •

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